MGM Resorts Is The King Of The Gaming Stock Hill

MGM Resorts International’s MGM shares don't seem to reflect either the company’s strong Q3 performance nor the likely upward revision of consensus expectations, Deutsche Bank’s Carlo Santarelli said in a report.

He maintained a Buy rating on MGM Resorts, while raising the price target from $32 to $33.

Terming MGM Resorts as the “Best idea in large cap gaming,” Santarelli mentioned that the share price performance had been “underwhelming” and could appreciate going ahead. He added, “While MGM's Macau exposure is limited, we think, given strong domestic fundamentals and its dramatically cheaper valuation, MGM could emerge as a lower risk way to garner Macau exposure.”

Encouraging Trends

The Q3 RevPAR result came in at +11 percent, significantly beating the 7 percent guidance, driven by a higher convention mix. MGM Resorts projected its Q4 RevPAR growth at 3 percent year-over-year, despite comps of +12 percent and indicated that growth could be strong in 2017, potentially similar to the 2016 level of +6 percent.

“We believe the Strip had a fairly solid October, though recall, October and November comps are very challenging. CONAG takes place in the 1Q17, thus, a good start to the year is expected,” the analyst commented.